King Hopes to Crush Doubt with New Sequel

After a dismal stock-market debut back in March, shares of King Digital Entertainment PLC are trading back around their initial public offering price--as investors warm to the idea that the game maker may be able to replicate its megahit "Candy Crush Saga."

It falls to Sebastian Knutsson, the company's creative chief, to prove them right.

A King co-founder, the 46-year-old Mr. Knutsson says the company has a proven formula: Make simple games, fast; and then distribute them to gamers around the world to determine quickly if they are hits or duds. Duds should fail fast and fail cheap, King says.

The Anglo-Swedish developer's latest offering is "Candy Crush Soda Saga," currently being rolled out in certain markets and queued up for a global launch in the fall. The game will be a litmus test for Mr. Knutsson's product-development method, and the first rollout to be scrutinized closely by investors.

The original Candy Crush game made up about 80% of King's gross bookings last year, and investors are eager to see King diversify that revenue stream with other, popular games. While "Candy Crush Saga" remains one of the world's highest-grossing mobile games, its popularity peaked last year.

Investors have until recently been wary about plowing money into the mobile-games industry, where developers like "Angry Birds" maker Rovio Entertainment Ltd. and Zynga Inc. have shown that home runs are notoriously difficult to repeat. Worry that King was a one-trick pony helped drive its shares sharply lower after they made their debut in late March on the New York Stock Exchange. Since bottoming out in May, they have been marching higher since.

As King's creative chief, Mr. Knutsson shepherds the company's game development, a rapidly growing gaming operation sprawling five countries, with multiple game teams.

"If one team tries something and it works, we want to repeat that quickly across other titles," he says. "Likewise, if we try something and it fails, the team must share that knowledge quickly and not bury that."

Mr. Knutsson remains a hands-on game designer 10 years after helping found the company. He was part of the small team of three who first conceived the basic concept for Candy Crush four years ago.

It is a so-called match-three game, which requires the player to manipulate objects to match at least three of them in a row. The concept wasn't new.

"With Candy Crush, we took the best bits of several match-three games and combined them into something much stronger," Mr. Knutsson said. "All that incremental innovation created an almost perfect game, which we didn't really understand when we started off."

Many game makers commit tens of millions of dollars early in a blockbuster development process that can take years. By contrast, King focuses its development around a rudimentary Web-based tournament gaming site called royalgames.com. It launches two new titles there every month. Anyone can register and play.

Three-person development teams create these simple, mostly single-level games in about three weeks. King then monitors popularity and engagement. The most popular games are then handed over to larger development teams, made up of 20 developers or more.

Those games are then launched as full-fledged "Saga" games, available on Facebook Inc. and mobile platforms. The games are free to download. King makes most of its money by selling in-game power-ups, like extra power for characters and less waiting between levels.

King's new game, Candy Crush Soda, looks instantly similar to the original title. But under the familiar hood, the game features improved graphics, as well as a new way players can spend money. Gamers can now pay for in-game currency, in the form of gold bars, that they can use to purchase in-game, virtual goodies, like special candies and extra movies.

"We have really tried to fine-tune the game we have and add new approaches," Mr. Knutsson said. The company believes the new Candy Crush game is likely to take a chunk of revenue from the original title, but is betting that combined revenue from the two games will be higher than it was for "Candy Crush Saga" alone.

Mr. Knutsson said that even before King hit on Candy Crush, it had sought to "ensure our development process is repeatable. We were asking ourselves how we could productify the game-making process, and it comes down to lowering the risk of failure."

FOLLOW FOX BUSINESS

Get Our Free Newsletter

Stocks

Top Stories

U.S. stocks ended down on Tuesday in a retreat from the previous session's sharp rally as energy shares declined and the dollar edged up, but the S&P 500 and Nasdaq registered their ninth straight quarterly rise.